President Donald Trump today announced the nomination of Joe Balash of Alaska to be an Assistant Secretary of the Interior, Land and Mineral Management.
Under Balash’s direction will be the Bureau of Land Management; the Office of Surface Mining, Reclamation, and Enforcement, the Bureau of Ocean Energy Management; and the Bureau of Safety and Environmental Enforcement.
Balash currently serves as the chief of staff to U.S. Sen. Dan Sullivan, who issued the following statement:
“While I’m sad to see Joe leave the Senate, his departure is a big gain for Secretary Zinke, the Department of Interior, the United States and Alaska. His wealth of knowledge and passion for Alaska – and more broadly federal land issues – cannot be overstated. His advice and counsel on natural resource matters will be invaluable as Secretary Zinke and the Trump Administration chart a new path toward American energy dominance. Alaska can and should be a critical element of this important national objective.”
Insiders have been expecting the appointment for weeks, as the Trump Administration vetted Balash. But many thought the announcement would come in September.
Balash is the former Commissioner of the Alaska Department of Natural Resources, which has management responsibility for one of the largest single portfolios of land and water resources in the world.
He also served as the Deputy Commissioner of the Alaska Department of Natural Resources from 2010 to 2013.
From 2006 to 2010, he advised two governors on natural resource policy, permitting, and energy and was a legislative staffer from 1998 to 2006.
A graduate of Ben Eielson Jr. High School, he is married and has two children. Balash will need to be confirmed by the Senate Natural Resources Committee chaired by Sen. Lisa Murkowski. That confirmation hearing is likely to occur in September, after the August recess.
Fair Anchorage activist, at left, harasses people who are signing a petition to protect bathroom privacy, while at the Bear Paw Festival this weekend.
HARASSMENT OF SIGNATURE GATHERERS BY DEMOCRATS
A group of moderate-to-conservative activists were at the Bear Paw Festival over the weekend to gather signatures to put “gender-definite bathrooms” on the Anchorage ballot in April.
They were engaging in the process of trying to undo a 2015 city ordinance that allows people of any gender to enter any bathroom at any time, no questions asked.
The signature gatherers were Anchorage Republicans who want citizens to be able to vote on whether public bathrooms are now gender neutral. They’re folks like Judy Eledge, a Republican activist, seen here.
Judy Eledge spent the day at the Bear Paw Festival in Eagle River gathering signatures for Protect Our Privacy, a ballot initiative.
Then it got ugly. The Protect Our Privacy petitioners were approached by shouting and harassing Democrats (we know they are Democrats because of their organizing efforts on Facebook), some of them wearing ACLU t-shirts, who converged on the signature gatherers, and yelled at people who signed the petition, calling them bigots and haters.
According to observers, some of the younger signature gatherers were able to move quickly through the crowd and lose the harassers, but as the weekend went on, Fair Anchorage and the Young Democrats figured out who to target and trailed them closely for hours.
“We got stalked, and jeered, and taunted,” said one of the women who was gathering signatures. She asked to remain anonymous out of concern for her children’s safety. One gatherer said her life was threatened by one of the Fair Anchorage activists.
Signature gatherers were surprised at the magnitude of the diversity of people who signed the petition — people from dozens of cultures and ethnicities willingly signed the petition.
“It’s looks like the United Nations,” said one of the petition organizers. “It’s stunning how diverse and culturally rich this effort has been. It’s a group of people that are completely different from what the Left thinks we are.”
While the Republicans of Eagle River allowed the signature gatherers to use their festival booth, at least two protesters stood within four feet of the booth like guards, and scared many people away.
Fair Anchorage activist, at the right, stands within a few feet of a young signature gatherer at the Bear Paw Festival, shouting at people to not sign the Protect Our Privacy petition.
By Sunday, the Fair Anchorage faction was well organized enough that they seemed to overwhelm the signature gatherers. “It really put a dent in our efforts,” one of the Protect Our Privacy” volunteers said. “People who came to the fair just didn’t want to be harassed.”
Another signature gatherer reported being harassed repeatedly by an individual in front of the Carrs on Huffman Road. Video of the man, a screenshot of which is here, shows him taunting the person who was gathering signatures, calling her a hater.
HOW THEY ORGANIZED
On Saturday, the Young Democrats put out an urgent action alert to get protestors to the Bear Paw Festival to harass the petition gatherers, posting this on Facebook:
URGENT ACTION ALERT: Jim Minnery has 8 people out at Bear Paw Festival July 12-16, 2017 collecting signatures to put an anti-trans bathroom bill on the ballot. Fair Anchorage urgently needs volunteers to canvass Bear Paw for #DeclineToSign signatures, and to educate people about Jim Minnery’s efforts to discriminate against the trans community. Please call or text Fair Anchorage Organizer Andrea Zekis at 501-392-4276 to get clipboards and signature sheets.
By Sunday, the Democrats and Fair Anchorage were out in force with glossy printed signs, and a well-organized counter effort.
SIGN HERE
People can sign the Protect Our Privacy petition by contacting [email protected], to find out the locations. Today is the final day to sign; the petitioners require about 5,700 signatures and will turn them in to the Anchorage City Clerk tomorrow.
The Municipality of Anchorage will then review the petition and decide if it will go to the April ballot.
The group is using the email address because of the increasing problems with harassment they’ve experienced in recent days.
In June, Alaska Department of Law attorneys were ready to advise the lieutenant governor that the Stand for Salmon petition was not likely to pass constitutional muster.
That way, Lt. Gov. Byron Mallott could reject the petition, with the legal research to back his decision. It is, after all, his to decide.
Stand for Salmon, an eco-glomerate of environmental interests, offered the petition to place an anti-development initiative on the ballot. It was a thinly veiled anti-Pebble initiative, but it was much, much broader, covering all manner of development.
But Mallott never had to make a public decision on the petition.
Democrat Lt. Gov. Byron Mallott speaks to the Alaska Center for the Environment before the beginning of the legislative session. Looking on from behind him are House Resources co-chairs Andy Josephson and Geran Tarr, both Democrats.
Instead of giving the information to Mallott, the Law Department sent the petitioners a detailed letter 18 days in advance of Mallott’s decision deadline, describing the constitutional deficiencies of their petition, explaining that it was not likely to pass legal muster, and giving them a chance for a do-over.
In her letter, the attorney general provided essential guidance on how the petition could be fixed. Attorney General Jahna Lindemuth put her thumb on the scale on behalf of the petitioners.
The Stand for Salmon group got busy with its legal team. It withdrew its original petition on July 14 — three days before Mallott was to issue a decision, and refiled a reworded petition that same day. The group addressed the Law Department’s concerns, mainly found on Pages 3, 6, and 8.
The new review deadline for Mallott’s decision is Sept. 12.
AG Lindemuth had sent her June 30 letter to Mike Wood, Bryan Kraft, and Gayla Hoseth, the petition sponsors, with the helpful advice:
“As noted above, should you choose to withdraw your application before the July 17, 2017 deadline, our office will not issue an Attorney General Opinion on 17FSHB. We will independently consider any subsequent initiative application that you may choose to file,” says the letter from the Attorney General’s Office, signed by Lindemuth and state attorney Elizabeth Bakalar, author of a left-tilting blog, OneHotMessAlaska (parental guidance advised).
WHAT THE INITIATIVE SEEKS
The Stand for Salmon referendum would, among other things, take away appropriating authority from the Legislature, and this was a big problem identified by the Department of Law: Only the Legislature has the power to appropriate.
The act would require a permit for any activity that would use, divert, obstruct, pollute, disturb, or otherwise alter anadromous fish habitat.
That means no permit would be given for a water treatment plant, wells, groundwater pumping, or other mechanical, chemical, or human intervention, maintenance, or care in areas near many waterways in Alaska.
As written, the act would prevent the construction of almost any dams in Alaska. Some hard-rock mines would be prohibited because they require “perpetual” water treatment.
Roads, gas lines and pipelines often require permanent re-routing of anadromous waters; most of these, too, would be prohibited under the act. Bye-bye King Cove Road, Juneau Access, and any hydro project.
Moreover, the act would favor one resource over another: Salmon over everything else.
GIVING TOO MUCH HELP TO ONE SIDE?
In the letter to the petitioners, AG Lindemuth states that, “When practicable and when circumstances warrant, we work with the sponsors of ballot initiatives prior to certification, to try to fix problems with the language of the ballot measure summary or with the form or substance of ballot initiative applications.”
It was her way of saying, “We’re here to help you get this on the ballot,” an approach that former lieutenant governors have told Must Read Alaska is unusual and perhaps lacking impartiality, especially if it is applied selectively to ballot initiatives favored by the Administration.
Moreover, the petition’s intent had already drawn the concern of those who had opposed the measure when it was a proposed law in the Legislature back in March.
Similar language had been originally been offered as a bill by Reps. Louise Stutes of Kodiak, and Andy Josephson and Les Gara of Anchorage. Stutes chairs the House Fisheries Committee and her bill raised alarms throughout other economic sectors in the state, from oil and gas to mining and transportation.
Among those expressing concern about Stutes’ House Bill 199 were the Alaska Oil and Gas Association, the Resource Development Council, the Council of Alaska Producers, Native interests such as Calista and the Kuskokwim Corporation, as well as Alaska Miners Association and, curiously, the Bristol Bay Fishermen’s Association, which said that Stutes’ law didn’t go far enough.
Karen Matthias, of the Council of Alaska Producers, wrote to the House Fisheries Committee in opposition to HB 199 “because it would shut down responsible resource development projects across the state, jeopardize the continuation or expansion of existing operations, delay and add costs to road construction and other state infrastructure projects, and it would inhibit community development. The real fiscal impact of this bill would be staggering.”
Matthias continued: “This bill creates a new permitting program that is more stringent than the applicable federal laws without giving any reason why the Clean Water Act, the Endangered Species Act, and the National Environmental Policy Act are deemed insufficient to project fish habitat and wildlife in Alaska.”
WHY DIDN’T IT PASS AS A BILL?
When HB 199 died, it was in part because Stutes didn’t want it to move too quickly.
“I am putting this bill forward to begin the public process so that it can be vetted totally, clearly, fully over the interim,” she said at the time. “I do not want to move this legislation in the House Fisheries committee this season.”
More likely Stutes realized the bill would kill her re-election chances if she moved it at all. Hers was a head fake. It was better for the proponents of the bill to take it to the ballot than for her to risk further political capital. Stutes is a member of a three-pronged group of Republicans (including Gabrielle LeDoux and Paul Seaton) that joined Democrats to take over power in the House this year, allowing her to take the coveted chairmanship of the Fisheries Committee.
WHAT HAPPENED NEXT?
By May, petition sponsors Wood, Kraft and Hoseth delivered a petition similar to Stutes’ bill to the Alaska Division of Elections. It contained 350 names, enough to get a review for ballot consideration.
The petitioners have been vocal critics of the Pebble mining project in Western Alaska, and Chuitna coal mining near Cook Inlet, but the voter initiative would not only cover those mining opportunities, but nearly any development project — public or private — that disturbs any waterway in Alaska.
Instead of fighting projects on a case-by-case basis, petitioners seek sweeping powers for the Department of Fish and Game to stop development, defining in law fish habitat as nearly any standing or moving body of water, including seasonal flood plains, and adjacent areas, and predetermining that any watershed is fish habitat unless specifically designated otherwise by the commissioner of Fish and Game.
Alaska’s Constitution allows for multiple use of water and wildlife resources, rather than prioritizing one use or policy over another. The constitution also disallows the appropriation of a resource to one group or for one use over another.
Lt. Gov. Mallott had 60 days to certify or reject the petition. That deadline expired Monday, but with the petition refiled, he now has another 60 days — until Sept. 12.
If certified, the group would gather thousands of signatures from across the state in order to advance the initiative to the November 2018 general election.
Not coincidentally, the initiative could be expected to draw anti-development voters to the polls, which would improve the electoral fortunes of Alaska’s Democrats.
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Gov. Bill Walker in January, 2017. (James Brooks photo)
Are the stars misaligning for Gov. Bill Walker of Alaska? In just one year his approval rating among voters has dropped from 50 percent to 42 percent.
In the same period, his disapproval rating has risen from 41 percent to 48 percent, according to a major poll released today.
As the first gubernatorial candidates are beginning to file letters of intent, politicos are watching to see if Walker’s fortunes are fading enough for his Democrat base to abandon him and slide a candidate onto the D-ticket. In 2014 the Alaska Democratic Party vacated their gubernatorial candidate and supported Walker as their only path to victory.
A recent straw poll in Eagle River, not scientific but a “sense of the court,” placed Walker sixth, behind Sen. Mike Dunleavy, a Republican who has announced his candidacy. He even placed lower than U.S. Sen. Democrat Mark Begich in this solidly Republican corner of the state.
In 2014, Walker won election with the endorsement and financial support of the Alaska Democrats, winning with 48 percent of the vote.
Morning Consult surveyed 195,704 registered U.S. voters from April 1 through July 10 to determine the latest Governor Approval Rankings.
Gov. Walker, who has left the political party system that hasn’t worked for him, came out in the bottom fifth of all governors.
Only seven others ranked lower than Alaska’s no-party governor.
Cutting the Permanent Fund dividend, his obsession with building a gasline, and lack of leadership were the reasons people have cited in more scientific polling done recently, results of which have not been widely shared.
At the bottom of the popularity pack was N.J. Gov. Chris Christie, followed by Sam Brownback of Kansas:
In the survey, voters were asked it they approve or disapprove of the job performance of President Donald Trump, their state’s governor, both of their U.S. senators, their U.S. House representative and their mayor (if they live in a city with more than about 10,000 residents).
For each question, they could answer strongly approve, somewhat approve, somewhat disapprove, strongly disapprove, or don’t know / no opinion.
Eagle River Republicans’ booth offered a straw poll during the Bear Paw Festival July 12-16. The poll was open to all. Participants self-selected, and were handed a ballot with potential gubernatorial candidates. They were allowed to vote for one.
The results:
The most interesting part of the process, said District 12 Chairman Ron Johnson, was to discover how many people had not heard of anyone on the list.
Johnson surmised that Dan Sullivan, former Anchorage mayor, came out on top because of his popularity as a mayor. Sulliavan isn’t running for governor, but has told people that he is running for Anchorage mayor in 2018, after having had a three-year break from the job. He had not filed as of Tuesday morning.
Joe Miller, who was second most popular on the straw poll, has also not announced he is running. In fact the only person who is certain as a candidate is Mike Dunleavy, who came in fifth, behind Mark Begich.
Straw polls are unscientific, of course. They are conducted with different methods and are useful only as a general gauge of those who self-selected to participate in the poll.
Gov. Bill Walker announced today the State has come to an tentative agreement with Ahtna Corp. over the public right of way on the Klutina Lake Road.
Pertinent settlement terms Ahtna and the State have agreed to, as described by his office, include:
Relocation of public parking and other facilities at the Gulkana River boat launch to protect historic townsite and cemetery
A 100-foot-wide state highway right-of-way along Klutina Lake Road
Fishing, daytime parking, and boating access (without a trailer) from the Klutina Lake Road right-of-way
Three locations along Klutina Lake Road where the public can launch boats using trailers
Camping and overnight parking opportunities provided by Ahtna for a reasonable fee outside of the Klutina Lake Road right-of-way, including at Boys’ Camp
A new 50-foot-wide state right-of-way to connect Klutina Lake Road to state land on Klutina Lake that has excellent potential for public recreation and hunting
The State is accepting public comment on the settlement that will give the public limited access to Klutina Lake and other waterways. Deadline for public comment is Aug. 30.
“This agreement is a good-faith effort to balance private ownership and public access needs,” said Attorney General Jahna Lindemuth. “While every settlement involves give and take, both sides were able to address the issues most important to them in this proposed settlement, including maintaining reasonable public access, and avoid the uncertainty of a long trial and likely appeal. The state will go to court when it makes sense, but we believe a settlement in this case provides a better opportunity to protect access to state lands and waters.”
The proposed settlement could end litigation between Ahtna and the State of Alaska regarding property interests and use of Klutina Lake Road.
It could resolve long-standing impacts to the Gulkana historic cemetery and townsite — while maintaining public access to fishing areas and outdoor recreation, according to a press release from the governor..
“During my visit to Gulkana last year, traditional Chief Fred Ewan told me he would like his village to regain ownership of his people’s ancestral land and burial sites,” Gov. Walker said. “I listened. The state has been locked in costly litigation for too long. I applaud Attorney General Jahna Lindemuth and Ahtna for coming to an agreement that protects public access to land while finally correcting this 50-year wrong.”
The lawsuit was filed by Ahtna in 2008, claiming the state was trespassing over Native lands by allowing the public to use the historic road.
The State, under former Gov. Sean Parnell, counterclaimed, saying the public has a public right-of-way under federal Revised Statute 2477. Both parties agreed there is an existing public road, but they disagreed on the width, scope of use and the State’s property interests in the road. The parties attempted to settle the lawsuit unsuccessfully under the prior administration.
Gov. Walker’s Attorney General Jahna Lindemuth began negotiating an agreement in 2016, and her actions nearly cost her her confirmation by the Legislature.
In January, the parties again began working through a mediator. After initially failing to come to agreement with the mediator, the parties continued discussions and agreed upon a settlement framework that included the “must haves” for the State (a 100-foot-wide right-of-way and ensuring the public’s ability to continue using the road to access outdoor activities) and for Ahtna (minimizing impacts to its private property rights and enabling Ahtna to better manage its lands and resources).
Copies of the proposed settlement agreement, maps, Judge Guidi’s order, the initial settlement framework (Klutina Lake Road – Framework) and a question-and-answer sheet can be found at www.gov.alaska.gov/klutina-gulkana-settlement. Copies of the material can be obtained from Department of Natural Resources in Suite 1260 of the Atwood Building, 550 W. 7th Ave., in Anchorage, or the Fairbanks Public Information Center at 3700 Airport Way.
Public meetings will be held in:
Gulkana – Tuesday, Aug. 1, from 3-5 pm at the Gulkana Hall, Gulkana, (traveling north on Richardson Highway, turn right at the sign for the village after the Gulkana River bridge)
Glennallen – Tuesday, Aug. 1 from 6:30-8:30 pm at the Alaska Bible College-Murdock Campus Center at 200 College Road
Anchorage – Wednesday, Aug. 2 from 6-8 pm in Room 104 of the Atwood Building, 550 West 7th Avenue
Wasilla – Thursday, Aug. 3 from 6-8 pm in Meeting Room 1-3, Curtis D. Menard Memorial Sports Center, at 1001 S. Clapp Street
Fairbanks – Monday, Aug. 7, from 6-8 pm in the Noel Wien Library auditorium, located at 1215 Cowles Street
Meetings will consist of informational sessions where details of the proposed settlement will be explained, followed by an opportunity for the public to provide comments.
Written comments can be sent to [email protected] or mailed to Department of Law, c/o Natural Resources Section – Klutina/Gulkana Comments, 1031 W. 4th Ave., Suite 200, Anchorage, AK 99501-1994. Written comments must be received by Aug. 30.
Sen. Mike Dunleavy of Wasilla filed a letter of intent with the Alaska Public Offices Commission today to run for governor. He is a Republican.
Dunleavy, who represents District E, left the Republican caucus earlier this spring after breaking with the caucus about cutting the Permanent Fund dividend as part of the overall state budget solution.
His plan was to make more significant cuts to government spending and restructure the Permanent Fund in such a way that the dividends were fully funded in the traditionally calculated method. Before parting ways with the caucus, he served on the Senate Finance committee and was chaired the State Affairs committee.
A former superintendent of schools, Dunleavy earned a bachelor’s of arts in history from College Misericordia, now known as Misericordia University, in Pennsylvania and his master’s degree in education at UAF.
His political experience includes being elected a board member of the Mat-Su School District, where he served also as board president.
His resume includes working as a superintendent, principal, vice principal, teacher, program manager of the Alaska Statewide Mentor Project, and owner of an education consultancy.
He is married and has three children.
“We welcome a strong candidate to the Republican primary race for Governor,” said Tuckerman Babcock, chairman of the Alaska Republican Party. “The Republican Party looks to Alaskans to choose the best Republican candidate, and then we expect our team to offer the best choice for Governor in 2018. The race is on! Our platform is clear for the Republican team: More oil and gas = low taxes = more jobs. Our State Convention is planned for Anchorage, March 8-10, and we invite all Republicans to save the date.”
* * *
Dunleavy wasn’t the first Republican to file for governor for 2018. That award goes to Michael Sheldon of Petersburg, who filed his letter of intent and has a web site.
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Rep. Chris Birch speaks in favor of the HB 111 compromise, saying no legislation is perfect, but ending cashable credits is a milestone.
A FINAL END TO ACES
A cash incentive program that has been successful in bringing smaller oil companies to explore and produce oil in Alaska’s North Slope oil patch has come at a price — one the State of Alaska can no longer afford.
In the late hours of Saturday night, both the House and Senate agreed to end the cashable credits that brought companies such as Caelus Energy and Armstrong Oil and Gas to Alaska.
The credits program was part of the old ACES tax regime. House Bill 111 addressed some of the unintended problems that ACES created.
WHAT HOUSE BILL 111 DOES
Instead of cashable credits, HB 111 moves companies to a tax deduction system, limiting the timeframe for when companies can deduct their net operating losses, basing it on actual production. It’s a measure that is going to make it more difficult for smaller oil companies, because getting a field into production takes many years of investment and initial losses.
The bill will save the State $200 million in the remainder of 2017, but will make it harder for Alaska to attract the smaller companies to what is an expensive operating environment, where oil tax systems have changed constantly.
HB 111 allows oil companies to carry forward losses for either 10 or 7 years, depending on the field’s production. The bill sets an interest rate of 5.25% above the prime rate for money owed to the state by any entity, so effectively 7 percent, as the prime rate is 1.75 percent currently. This is the rate for all delinquent taxes, not only oil and gas.
“The Senate initiated credit reform in 2015,” said Sen. Cathy Giessel, who has led the effort to reform the cash payment program, starting with the Cook Inlet oil and gas fields in legislation that passed in 2016. “Tonight’s action is the culmination of that work and sets the State on a responsible, sustainable course.”
“We’re committed to maintaining a fair, competitive oil tax regime that secures these private-sector opportunities,” said Giessel, chair of the Senate Resources Committee. But she told reporters that, “This bill — make no mistake about it — is a tax increase.”
Senate President Pete Kelly, R-Fairbanks, said, “We do not believe this cash payment reform will significantly curtail investment or endanger jobs.”
The legislation has other provisions, such as “ring fencing,” which limits the ability of explorers to transfer net operating losses between fields before getting to production. In the future, carry forwards can only be used against the field where they were incurred until production begins. In the past, they could be applied to any N. Slope field where the company had a working interest.
Rep. Tammie Wilson, R-North Pole was a no vote on the legislation, saying the fiscal notes on the bill did not add up, and she would need more time to study the bill. Other no votes were Republican Reps. Cathy Tilton of Wasilla-Chugiak, Mark Neuman of Big Lake, George Rauscher of Mat-Su-Valdez, David Eastman of Wasilla and, surprisingly Democrat Sam Kito of Juneau. Rep. Ivy Spohnholz of East Anchorage was not present.
Rep. Tammie Wilson of North Pole speaks about the fiscal notes on HB 111 and her concerns about being rushed to vote on the legislation.
The Senate was unanimously in favor of the bill.
Gov. Bill Walker signaled that he will sign the legislation, but once again called for an income tax on Alaskans, although did not refer to it specifically: “Alaskans deserve a complete fiscal plan and economic stability for the future. I urge lawmakers to continue with this spirit of compromise and collaboration, and pull together to fix Alaska.”
PRIVATE SECTOR RESPONSE: THIS HURTS SMALL COMPANIES
The Alaska Oil and Gas Association noted on Twitter, “Make no mistake: HB 111 will have a negative impact on investment in Alaska. 7th tax change in 12 years.”
One oil company associate speaking on condition of anonymity said the legislation will lead to major companies once again dominating oil production from the North Slope: “So the types of players the Democrats have been courting for years — the small companies — they have effectively just chased away.”
Ending the cash credits was one part of the overall fiscal plan. The governor has also repeatedly called for a “broad-based tax” on Alaskans as a “must have” part of his complete fiscal plan. He is no longer using the words “income tax,” though that is what he has in mind.
DEMOCRATS STRUGGLING IN CAUCUS
The difficulty that the House Democrat-led majority is having within its ranks was evident on Saturday, when the conference committee for HB 111 was set for 1 pm, but did not convene until after 9:15 pm, less than three hours before the special session would end.
That delay was because Reps. Paul Seaton of Homer and Les Gara of Anchorage blew up the fragile compromise by once again trying to force even more onerous conditions on the small oil explorers. Outside of caucus, no one knows what their demands were, but they were enough to keep legislators on campus until the final hour.
Rep. Les Gara of Anchorage talks about how the state has gone from the best credit rating in the nation in 2014 to the worst credit rating in the nation in 2017. He was making a case for income taxes during the waning hours of the second special session: “There’s a big part of the job this legislature has not been able to come together to do.”
Rep. Geran Tarr, the Democrats’ chair of the conference committee on HB 111, was attempting to get to a resolution, but every time she and Sen. Giessel had a handshake agreement, Tarr took it back to her Democrat-controlled caucus, where it was rejected by members more powerful than she.
For much of the afternoon and well into the night, it appeared that the legislation would fail altogether.
CAPITAL BUDGET NEXT
Because of the deep philosophical differences between Republican-led Senate leadership and Democrat-led House leadership, Gov. Walker was forced to separate all items of legislation into individual special sessions, so that Democrats could not leverage every important piece of legislation against some other one in order to get an income tax passed. The Senate Republicans have held firm on opposing income taxes at this time.
The capital budget — money for road work and other infrastructure — is the next critical item remaining. Early Sunday, Senate President Pete Kelly invited the House to tackle the capital budget in a third special session, which would begin this week. House leadership did not immediately respond.
As drafted, the capital budget would use $56 million in state money to bring in $1.2 billion in federal money. Without a capital budget in place by July 31, negative impacts on jobs and infrastructure work would occur by October.
The capital budget has not been as contentious as the other items, but was held hostage by Democrats during regular session.
“We are close to agreement and should continue negotiations toward a prompt resolution,” said Sen. Peter Micciche, Soldotna, Senate majority leader.
“Alaska is facing tough economic times,” said Sen. Anna MacKinnon, Eagle River, who co-chairs of the Senate Finance Committee. “Job losses are high, our unemployment rate at 6 percent is the highest in the nation, and we’ve lost ground on other key indicators. Eliminating cash payments to oil companies was a good step forward, and we must now turn our focus to a capital budget.”
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“I’m a Conservative who believes in lower taxes. They lead to a more enterprising economy. But I’m not somebody who believes you can fund lower taxes by borrowing more money.” – George Osborne
George Osborne, a member of British Parliament for 16 years and former Chancellor of the Exchequer, is noted as a social liberal and fiscal conservative. He understood the temptation to avoid the hard choice of reducing government deficits by cutting expenses while continuing to support the economy through lower taxes.
Osborne understood that raising taxes or borrowing money to fund unnecessary expenses eventually drives jobs and investment away and weakens your economy.
Win Gruening
As Alaskans, we tend to focus on budget battles occurring at the national and state level. Indeed, those battles will have a significant effect on our community and each of us, as individuals.
Yet, the same battle is also playing out at the municipal level throughout Alaska as communities struggle to balance declining revenues apnd faltering economies with the needs and wants of our citizens.
Juneau’s declining school enrollments, stagnant population, weakening retails sales, rapidly growing homeless problem, and epidemic of petty crime, and opioid abuse indicate harder times ahead.
By the end of 2017, employment throughout the state will have fallen to 2010 levels meaning the economy will have lost 15,000 jobs.
Juneau, supported by the mining and tourism sectors and government employment (which provides 38% of all jobs), has yet to feel the full effects of Federal and State cutbacks. But these changes are coming as government program costs are either reduced or shifted to municipal budgets.
In the FY18 CBJ budget beginning July 1, city staff and the Assembly were unable to align revenues and expenses and were forced to use cash reserves to balance the budget. Two vacant city jobs were eliminated, cuts to other city services were minimal, and our deficit was plugged with an infusion of $800,000 from our existing fund balance.
While the Assembly has decided for now against raising property taxes or our current sales tax, other funding ideas are being floated in response to several proposed community projects.
Normally, these projects could be funded from within the portion of the existing 5 percent sales tax reserved for capital projects and deferred maintenance. This component – amounting to 1 percent — is up for renewal in October and is projected to raise about $43 million over the next five years.
However, the competition for these funds is very keen and topping the priority list are community infrastructure needs including rehabilitating Juneau’s drinking and waste water systems along with facility upgrades and maintenance at our airport, harbors, and municipal buildings.
It’s generally recognized these projects should take precedence since they are basic infrastructure needs and, in many cases, come with significant matching funds from Federal and State sources.
It is unlikely there will be enough money left for other projects on the list to receive any significant support. Two of the largest projects, the new Juneau Arts and Culture Center (JACC) and a pre-school program designed to provide early learning and affordable universally available child care (Best Start) are requesting $5 million and $14.5 million respectively.
Besides sales taxes, two other funding methods being considered are to tap another tax source or have CBJ borrow the money.
So far, the JACC has raised about 20 percent of what they will need but is a long way from reaching their goal of $26 million. Supporters have suggested raising the current Juneau Hotel/Motel Tax by 1-2 percent to aid this project and perhaps even provide some additional funding for Centennial Hall – now currently losing about $600,000 annually.
Because the “Best Start” project request is a perpetual operating subsidy and would consume almost one-third of all future 1 percent sales tax requests, alternatively some or all of their request could be voted on this fall as a bond proposition. If passed, this would add to Juneau’s existing debt service levy and have the effect of raising property taxes.
These proposals deserve scrutiny as the Assembly decides how best to allocate sales tax proceeds and whether to approve any tax increase.
A question: Is it wise now to incur additional debt for new programs or facilities?
Regardless of the merit of any proposed project, voters should consider carefully any new tax proposals or bond propositions in light of continuing state economic contraction and the current uncertainties surrounding State school and bond debt reimbursement.
Now, more than ever, we need to encourage economic development that brings new jobs and investment to our community allowing our population and tax base to grow.
Increasing our debt service (and property tax) or raising taxes on visitors staying in hotels, motels or B&B’s will have just the opposite effect.
Win Gruening retired as the senior vice president in charge of business banking for Key Bank in 2012. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is active in community affairs as a 30-plus year member of Juneau Downtown Rotary Club and has been involved in various local and statewide organizations.
